I 

118TH CONGRESS 

2D SESSION H. R. 9309 

To provide for regulatory sandboxes that permit certain persons to experiment 

with artificial intelligence without expectation of enforcement actions. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 6, 2024 

Mr. HILL (for himself and Mr. TORRES of New York) introduced the following 

bill; which was referred to the Committee on Financial Services 

A BILL 

To provide for regulatory sandboxes that permit certain persons to experiment with artificial intelligence without 

expectation of enforcement actions. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Unleashing AI Innova5 tion in Financial Services Act’’. 

6 SEC. 2. USE OF ARTIFICIAL INTELLIGENCE BY REGULATED 

7 FINANCIAL ENTITIES. 

8 (a) DEFINITIONS.—In this section: 

9 (1) AI TEST PROJECT.—The term ‘‘AI test 

10 project’’ means a financial product or service that 


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1 falls under the jurisdiction of a financial regulatory 

2 agency and— 

3 (A) substantially uses artificial intelligence; 

4 and 

5 (B) is or may be subject to a Federal regu6 lation or Federal statute. 

7 (2) APPROPRIATE FINANCIAL REGULATORY

8 AGENCY.—The term ‘‘appropriate financial regu9 latory agency’’ means— 

10 (A) the appropriate Federal banking agen11 cy, as defined in section 3 of the Federal De12 posit Insurance Act (12 U.S.C. 1813); 

13 (B) the Securities and Exchange Commis14 sion, with respect to— 

15 (i) any broker or dealer that is reg16 istered with the Commission under the Se17 curities Exchange Act of 1934 (15 U.S.C. 

18 78a et seq.), with respect to the activities 

19 of the broker or dealer that require the 

20 broker or dealer to be registered under 

21 that Act; 

22 (ii) any investment company that is 

23 registered with the Commission under the 

24 Investment Company Act of 1940 (15 

25 U.S.C. 80a–1 et seq.), with respect to the 


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1 activities of the investment company that 

2 require the investment company to be reg3 istered under that Act; 

4 (iii) any investment adviser that is 

5 registered with the Commission under the 

6 Investment Advisers Act of 1940 (15 

7 U.S.C. 80b–1 et seq.), with respect to the 

8 investment advisory activities of such com9 pany and activities that are incidental to 

10 such advisory activities; 

11 (iv) any clearing agency registered 

12 with the Commission under the Securities 

13 Exchange Act of 1934 (15 U.S.C. 78a et 

14 seq.), with respect to the activities of the 

15 clearing agency that require the agency to 

16 be registered under such Act; 

17 (v) any nationally recognized statis18 tical rating organization registered with 

19 the Commission under the Securities Ex20 change Act of 1934 (15 U.S.C. 78a et 

21 seq.); 

22 (vi) any transfer agent registered with 

23 the Commission under the Securities Ex24 change Act of 1934 (15 U.S.C. 78a et 

25 seq.); 


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1 (vii) any exchange registered as a na2 tional securities exchange with the Com3 mission under the Securities Exchange Act 

4 of 1934 (15 U.S.C. 78a et seq.); 

5 (viii) any national securities associa6 tion registered with the Commission under 

7 the Securities Exchange Act of 1934 (15 

8 U.S.C. 78a et seq.); 

9 (ix) any securities information proc10 essor registered with the Commission 

11 under the Securities Exchange Act of 1934 

12 (15 U.S.C. 78a et seq.); 

13 (x) the Municipal Securities Rule14 making Board established under the Secu15 rities Exchange Act of 1934 (15 U.S.C. 

16 78a et seq.); 

17 (xi) the Public Company Accounting 

18 Oversight Board established under the 

19 Sarbanes-Oxley Act of 2002 (15 U.S.C. 

20 7211 et seq.); 

21 (xii) the Securities Investor Protection 

22 Corporation established under the Securi23 ties Investor Protection Act of 1970 (15 

24 U.S.C. 78aaa et seq.); and 


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1 (xiii) any security-based swap execu2 tion facility, security-based swap data re3 pository, security-based swap dealer or 

4 major security-based swap participant reg5 istered with the Commission under the Se6 curities Exchange Act of 1934 (15 U.S.C. 

7 78a et seq.), with respect to the security8 based swap activities of the person that re9 quire such person to be registered under 

10 such Act; 

11 (C) the Bureau of Consumer Financial 

12 Protection, with respect to a covered person, as 

13 defined in section 1002 of the Consumer Finan14 cial Protection Act of 2010 (12 U.S.C. 5481), 

15 that is not described in subparagraph (A), (B), 

16 (D), or (E); 

17 (D) the National Credit Union Administra18 tion, with respect to an insured credit union; 

19 and 

20 (E) the Federal Housing Finance Agency, 

21 with respect to Federal Home Loan Banks or 

22 the Federal Home Loan Bank System, and 

23 with respect to the Federal National Mortgage 

24 Association or the Federal Home Loan Mort25 gage Corporation. 


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1 (3) ARTIFICIAL INTELLIGENCE.—The term ‘‘ar2 tificial intelligence’’ has the meaning given the term 

3 in section 5002 of the National Artificial Intelligence 

4 Initiative Act of 2020 (15 U.S.C. 9401). 

5 (4) COMMISSION.—The term ‘‘Commission’’ 

6 means the Securities and Exchange Commission. 

7 (5) FEDERAL SECURITIES LAWS.—The term 

8 ‘‘Federal securities laws’’ means— 

9 (A) the Securities Act of 1933 (15 U.S.C. 

10 77a et seq.); 

11 (B) the Securities Exchange Act of 1934 

12 (15 U.S.C. 78a et seq.); 

13 (C) the Sarbanes-Oxley Act of 2002 (15 

14 U.S.C. 7201 et seq.); 

15 (D) the Trust Indenture Act of 1939 (15 

16 U.S.C. 77aaa et seq.); 

17 (E) the Investment Company Act of 1940 

18 (15 U.S.C. 80a–1 et seq.); 

19 (F) the Investment Advisers Act of 1940 

20 (15 U.S.C. 80b–1 et seq.); and 

21 (G) the Jumpstart Our Business Startup 

22 Act (Public Law 112–106; 126 Stat. 306). 

23 (6) FINANCIAL PRODUCT OR SERVICE.—The 

24 term ‘‘financial product or service’’— 


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1 (A) has the meaning given the term in sec2 tion 1002 of the Consumer Financial Protection 

3 Act of 2010 (12 U.S.C. 5481); 

4 (B) includes— 

5 (i) activities that are financial in na6 ture, as defined in section 4(k)(4) of the 

7 Bank Holding Company Act of 1956 (12 

8 U.S.C. 1843(k)(4)); 

9 (ii) any financial product or service 

10 provided by a person regulated by the 

11 Commission, as defined in 1002 of the 

12 Consumer Financial Protection Act of 

13 2010 (12 U.S.C. 5481); and 

14 (iii) includes the offer or sale of any 

15 security subject to the Federal securities 

16 laws; and 

17 (C) does not include the business of insur18 ance. 

19 (7) FINANCIAL REGULATORY AGENCY.—The 

20 term ‘‘financial regulatory agency’’ means— 

21 (A) the Board of Governors of the Federal 

22 Reserve System; 

23 (B) the Federal Deposit Insurance Cor24 poration; 


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1 (C) the Office of the Comptroller of the 

2 Currency; 

3 (D) the Securities and Exchange Commis4 sion; 

5 (E) the Bureau of Consumer Financial 

6 Protection; 

7 (F) the National Credit Union Administra8 tion; and 

9 (G) the Federal Housing Finance Agency. 

10 (8) REGULATED ENTITY.—The term ‘‘regulated 

11 entity’’ means an entity regulated by any financial 

12 regulatory agency. 

13 (b) REGULATORY SANDBOXES.— 

14 (1) ESTABLISHMENT.—Each financial regu15 latory agency shall establish a regulatory sandbox 

16 that allows regulated entities to experiment with AI 

17 test projects without unnecessary or unduly burden18 some regulation or expectation of retroactive en19 forcement actions. 

20 (2) APPLICATIONS.— 

21 (A) SUBMISSION.— 

22 (i) IN GENERAL.—A regulated entity 

23 may submit to the appropriate financial 

24 regulatory agency an application, on a 

25 form determined by the appropriate finanVerDate Sep 11 2014 19:15 Sep 07, 2024 Jkt 049200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H9309.IH H9309

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1 cial regulatory agency, to engage in an AI 

2 test project. 

3 (ii) CONTENTS.—An application sub4 mitted under clause (i) shall include— 

5 (I) a description of the AI test 

6 project proposed to be carried out by 

7 the regulated entity; 

8 (II) an alternative compliance 

9 strategy that— 

10 (aa) identifies a regulation 

11 issued by the appropriate finan12 cial regulatory agency or a Fed13 eral statute enforced by the ap14 propriate financial regulatory 

15 agency that the regulated entity 

16 requests to be waived or modi17 fied; and 

18 (bb) proposes an alternative 

19 method for the regulated entity 

20 to comply with the regulation or 

21 statute, including an explanation 

22 as to why the alternative method 

23 is essential to the operation of 

24 the entity; 


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1 (III) a demonstration that, under 

2 the strategy described in subclause 

3 (I), the AI test project— 

4 (aa) would serve the public 

5 interest, improve consumer ac6 cess to a financial product or 

7 service, or promote consumer 

8 protection; 

9 (bb) would enhance effi10 ciency or operations, foster inno11 vation or competitiveness, im12 prove risk management and secu13 rity, or enhance regulatory com14 pliance; 

15 (cc) would not present a sys16 temic risk to the financial system 

17 of the United States; 

18 (dd) is consistent with the 

19 purposes of the anti-money laun20 dering and countering the financ21 ing of terrorism obligations under 

22 subchapter II of chapter 53 of 

23 title 31, United States Code; and 


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1 (ee) would not present a na2 tional security risk to the United 

3 States; 

4 (IV) a proposed date on which 

5 the AI test project would terminate 

6 and an explanation of why such termi7 nation date would be appropriate; 

8 (V) proposed limitations on the 

9 size, scope, and growth of the AI test 

10 project; and 

11 (VI) an estimate of the economic 

12 impact of the AI test project if ap13 proved. 

14 (iii) JOINT APPLICATIONS.—Two or 

15 more regulated entities may submit a joint 

16 application to the same financial regu17 latory agency under clause (i). 

18 (iv) REGULATIONS AND STATUTES OF

19 OTHER AGENCIES.— 

20 (I) IN GENERAL.—A regulated 

21 entity may submit an application 

22 under this subparagraph that includes 

23 an alternative compliance strategy for 

24 a regulation issued by or a Federal 

25 statute enforced by a financial reguVerDate Sep 11 2014 19:15 Sep 07, 2024 Jkt 049200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H9309.IH H9309

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1 latory agency that is not the appro2 priate financial regulatory agency for 

3 the regulated entity. 

4 (II) REQUIREMENTS.—An appli5 cation described in subclause (I) shall 

6 be subject to the same requirements 

7 as an application described in clause 

8 (ii), except that— 

9 (aa) the regulated entity 

10 shall submit the application to 

11 the appropriate financial regu12 latory agency and the financial 

13 regulatory agency that issued the 

14 regulation or enforces the statute 

15 or regulation that is the subject 

16 of the alternative compliance 

17 strategy; and 

18 (bb) the AI test project may 

19 not take effect unless the appro20 priate financial regulatory agency 

21 and any other financial regu22 latory agency that issued the reg23 ulation or enforces the statute 

24 that is the subject of the alter25 native compliance strategy jointly 


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1 approve the application using the 

2 process described in subpara3 graph (B). 

4 (v) NOTICE.—A regulated entity that 

5 is regulated or supervised by more than 1 

6 financial regulatory agency shall provide 

7 notice of any application submitted to the 

8 appropriate financial regulatory agency 

9 under this section to each financial regu10 latory agency by which it is regulated or 

11 supervised not later than 5 business days 

12 after the entity submits the application to 

13 the appropriate financial regulatory agen14 cy. 

15 (B) AGENCY REVIEW.— 

16 (i) IN GENERAL.—Except as provided 

17 in clause (v), not later than 90 days after 

18 the date on which an application is sub19 mitted to the appropriate financial regu20 latory agency under subparagraph (A), the 

21 appropriate financial regulatory agency 

22 shall— 

23 (I) review the application; and 

24 (II) submit to the applicant in 

25 writing a determination of the agency. 


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1 (ii) APPROVAL.— 

2 (I) IN GENERAL.—If the appli3 cant shows that it is more likely than 

4 not that the application meets the re5 quirements for establishing an alter6 native compliance strategy and meets 

7 the requirements described in sub8 paragraph (A)(ii)(II), the agency shall 

9 approve the application and notify the 

10 applicant in writing of— 

11 (aa) the regulation or Fed12 eral statute that is the subject of 

13 the alternative compliance strat14 egy; 

15 (bb) the terms of the alter16 native compliance strategy for 

17 the AI test project; 

18 (cc) the date on which the 

19 AI test project will terminate; 

20 (dd) any limitations on the 

21 size, scope, or growth of the AI 

22 test project; and 

23 (ee) any additional limita24 tions or conditions on the AI test 

25 project, as determined by the apVerDate Sep 11 2014 19:15 Sep 07, 2024 Jkt 049200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H9309.IH H9309

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1 propriate financial regulatory 

2 agency. 

3 (II) EFFECT OF APPROVAL.—Ex4 cept as provided in subclause (III), 

5 beginning on the date on which an ap6 plication submitted under subpara7 graph (A) is approved and ending on 

8 the date described in subclause 

9 (I)(cc)— 

10 (aa) the appropriate finan11 cial regulatory agency may en12 force a regulation or Federal 

13 statute described in subclause 

14 (I)(aa) only in the manner set 

15 out in the alternative compliance 

16 strategy described in subclause 

17 (I)(bb); and 

18 (bb) a financial regulatory 

19 agency that is not the appro20 priate financial regulatory agency 

21 may not enforce a regulation or 

22 Federal statute described in sub23 clause (I)(aa) with respect to the 

24 conduct of the AI test project by 

25 the regulated entity. 


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1 (III) ENFORCEMENT BY AN2 OTHER FINANCIAL REGULATORY

3 AGENCY.—A financial regulatory 

4 agency other than the appropriate fi5 nancial regulatory agency that ap6 proves an application under subpara7 graph (A)(iv) may enforce a regula8 tion or Federal statute described in 

9 subclause (I)(aa) if the alternative 

10 compliance strategy described in sub11 clause (I)(bb) provides for enforce12 ment by such financial regulatory 

13 agency. 

14 (IV) RULE OF CONSTRUCTION.— 

15 Nothing in this clause may be con16 strued to limit the authority of a fi17 nancial regulatory agency to take an 

18 enforcement action against a regu19 latory entity with respect to fraud re20 lating to an AI test project. 

21 (iii) DENIAL.— 

22 (I) IN GENERAL.—If an agency 

23 denies an application submitted under 

24 subparagraph (A), the agency— 


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1 (aa) shall submit to the ap2 plicant a written notice explain3 ing the reason for denial, includ4 ing evidence that the applicant 

5 did not satisfy the requirements 

6 for establishing an alternative 

7 compliance strategy and the 

8 baseline used by the agency to 

9 measure the likely economic con10 sequences of rejecting the appli11 cation; and 

12 (bb) may not take an en13 forcement action against the ap14 plicant earlier than the date that 

15 is 30 days after the date on 

16 which the agency submits the 

17 written notice described in item 

18 (aa). 

19 (II) RESUBMITTALS.—Each time 

20 an application submitted under sub21 paragraph (A) is denied, the regulated 

22 entity may submit another application 

23 if the application is not substantially 

24 similar to the one denied. 


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1 (III) INJUNCTIVE RELIEF.—If a 

2 financial regulatory agency determines 

3 an AI test project presents an imme4 diate danger to consumers or presents 

5 a risk to financial markets, the agency 

6 may file a civil action in an appro7 priate court seeking to enjoin such 

8 project. 

9 (IV) RULE OF CONSTRUCTION.— 

10 Nothing in this clause may be con11 strued to limit the authority of a fi12 nancial regulatory agency to take an 

13 enforcement action against an appli14 cant with respect to fraud relating to 

15 the AI test project. 

16 (iv) EXTENSION.—If the financial reg17 ulatory agency needs additional time, the 

18 agency may vote to extend the application 

19 deadline by 90 days. After the expiration 

20 of the 90-day period, if the agency has not 

21 made a determination on the application, 

22 the application will automatically be 

23 deemed approved and effective. 


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1 (C) DATA SECURITY.—All data supplied by 

2 sponsors of AI test projects submitted under 

3 this section shall be stored in a secure manner. 

4 (D) REGULATIONS.—Not later than 180 

5 days after the date of enactment of this Act, 

6 each financial regulatory agency shall promul7 gate regulations that— 

8 (i) shall be published in the Federal 

9 Register and provide a 45-day period for 

10 public notice and comment; and 

11 (ii) include— 

12 (I) procedures for modifying the 

13 AI test projects that are approved by 

14 the agency; 

15 (II) consequences for failure to 

16 comply with set terms; 

17 (III) termination dates not ear18 lier than 1 year after the date on 

19 which AI test projects are approved; 

20 (IV) procedures to extend the 

21 termination date described in sub22 clause (III); 

23 (V) procedures for confiden24 tiality; and 


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1 (VI) procedures for coordinating 

2 decisions relating to applications sub3 mitted jointly by multiple regulated 

4 entities or applications submitted to 

5 more than one financial regulatory 

6 agency. 

7 (c) REPORT.—Each financial regulatory agency shall 

8 submit to the Committee on Banking, Housing, and 

9 Urban Affairs of the Senate and the Committee on Finan10 cial Services of the House of Representatives an annual 

11 report on the outcomes of AI test projects. 

12 (d) REGULATIONS.—After approving not fewer than 

13 1 AI test project, a financial regulatory agency may pro14 mulgate regulations, after providing a notice and an op15 portunity for public comment, establishing other AI activi16 ties or products that qualify as AI test projects. 

Æ 


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